Excerpt:customs act, 1962: section 28(1)(b) show cause notice - .....petitioner had filed an application with the customs authorities for clearance of 566 bags of raw kapok imported from bangla desh. the petitioner declared that the said import was not liable to payment of import duty both basic and auxiliary, because the import of the said bags of kapok was made under 'balanced trade and payment arrangement'. the customs authority had allowed the petitioner to clear the said consignment without levying any import duty. on 1st march, 1978 the assistant collector of customs, calcutta, appraisement unit issued memo no. c-viii(6)1(a)/cau/cus/743749, stating that the petitioner had imported the aforesaid consignment of kapok from bangla desh on 25th january, 1974 after expiry of 'the limited payment arrangement' and at the relevant time 'the balanced trade.....

Judgment:

Chittatosh Mukherjee, J.

1. On 25th January, 1974 the petitioner had filed an application with the Customs Authorities for clearance of 566 bags of raw kapok imported from Bangla Desh. The petitioner declared that the said import was not liable to payment of import duty both basic and auxiliary, because the import of the said bags of kapok was made under 'balanced trade and payment arrangement'. The Customs Authority had allowed the petitioner to clear the said consignment without levying any import duty. On 1st March, 1978 the Assistant Collector of Customs, Calcutta, Appraisement Unit issued Memo No. C-VIII(6)1(a)/CAU/CUS/743749, stating that the petitioner had imported the aforesaid consignment of kapok from Bangla Desh on 25th January, 1974 after expiry of 'the limited payment arrangement' and at the relevant time 'the balanced trade and payment agreement' had come into force which did not extend to cover import of kapok. The petitioner was allowed to clear the said consignment without payment of duty on the same. The petitioner was requested to make payment of duty amounting to Rs. 27,905.02 p. within a period of 15 days from the date of the receipt of the said letter of demand. Thereupon, the petitioner moved this Court and obtained the present Rule.

2. The petitioner has made three-fold submissions. In the first place, it has been contended that the said import of kapok from Bangla Desh made by the petitioner was exempt from payment of import duty. The respondents were bound by the doctrine of promissory estoppel inasmuch as the petitioner had acted upon representation made by the respondents that imports of kapok from Bangla Desh were exempt from payments of duty and, therefore, it would be inequitable to allow the respondents now to realise duty from the petitioners. Thirdly, the petitioner has submitted that the said demand dated 1st March, 1978 made by the Assistant Collector of Customs, Calcutta (vide Annexure 'B') was barred by limitation and also in breach of the provisions contained in Section 28(1) of the Customs Act, 1962.

3. The respondents in their affidavit-in-opposition affirmed by Samir Kumar Mitra, Assistant Collector of Customs, Calcutta have set out in extenso the various provisions including notifications relating to duty payable in respect of kapok importation. Under Item No. 87 of the First Schedule (Import Tariff Schedule) to the Indian Tariff Act, 1934, kapok was subjected to import duty at the rate set forth. By a notification dated 9th October, 1948 which was amended by two subsequent notifications dated 19th September, 1956 and 27th July, 1963 raw kapok imported from Pakistan was exempted from payment of customs duty. After the establishment of the Sovereign Republic of Bangladesh, the trade between India and Bangla Desh was governed by limited payment arrangement during the period March 28, 1972 to September 27, 1973. The Government of India by a notification dated 28th November, 1972 had exempted kapok from payment of duty and a few other products when imported into India from Bangla Desh. On January 10, 1972 the Central Government by an amendment notification had inserted in the said two notifications the words 'in pursuance of the limited payments arrangement set forth in the Schedule 'A' to the trade agreement between India and Bangla Desh' (vide Annexure 'D' to the affidavit-in-opposition). The Government of India by subsequent notification dated 11th May, 1973 had exempted kapok and several other goods from payment of auxiliary duty in view of the fact that those goods had been exempted from the payment of customs duty by a notification dated November 28, 1973 (vide Annexure 'E' to the affidavit-in-opposition).

4. The respondents have further disclosed that the aforesaid limited payment arrangements between India and Bangla Desh had expired on 27th September, 1973. New arrangments known as 'balanced trade payment arrangements' came into force with effect from 28th September, 1973. In the absence of any notification exempting payment of duty on kapok imported after 28th September, 1973 under balanced trade payment arrangements with Bangla Desh, the said importation was subject to payment of basic and auxiliary import duties as specified in Item No. 87 of the First Schedule of the Indian Tariff Act. The petitioner was totally wrong about the scope and effect of the Notification made under Finance Act, 1974 set out in paragraph 10(a) of the Writ petition. Only those goods which were already exempt from the payment of basic duty specified in the First Schedule of the Indian Tariff Act by virtue of the previous notifications were further exempted from the payment of auxiliary duty leviable thereon under Section 19(1) of the Finance Act, 1954. I have already pointed out that kapok imported from Bangla Desh under limited payments arrangement was made exempt from payment of bask duty by the aforesaid notifications. But after the said limited payments arrangement expired, there was no notification exempting importation of kapok under balanced trade payments arrangement from Bangla Desh from payment of either basic or auxiliary duty. The petitioner had imported the aforesaid consignment of kapok on 25th January, 1974 when balanced trade payment arrangements were in force-Therefore, the same was subject to levy of import duty and the petitioner's claim for exemption was totally untenable.

5. In the instant case, the petitioner is not entitled to rely upon the doctrine of promissory estoppel in order to resist the petitioner's liability to pay excise duty on the aforesaid consignment of kapok imported from Bangla Desh. Upon a true construction of the aforesaid notifications dated 28th November, 1972 and 10th January, 1973 it must beheld that the same had exempted from payment of duty on kapok and other specified goods imported from Bangla Desh only under limited payments arrangement. The respondents did not make any representations either by words or b y conduct that the consignment of kapok imported after the expiry of the limited payments arrangement would be also exempt from pay men t of import duty. In the absence of any such notification the consignment of kapok imported by the petitioner on 25th January, 1974 under the balanced trade payments arrangement was liable to be levied with import duty. In this case no equity arose in favour of the petitioner and therefore, the petitioner cannot plead equitable estoppel and escape liability from payment of import duty levied by authority of law.

6. The respondents did not levy any duty upon the aforesaid consignment at the time of its clearance from the Calcutta Port on 15th January, 1974, The demand of import duty upon the said import of kapok by the Assistant Collector of Customs, Calcutta Appraisement Unit made by his aforesaid letter dated 1st March, 1978 must be held to be illegal and in violation of Section 28 of the Customs Act, 1962. The Assistant Collector did not issue any notice on the petitioner to show cause why they should not pay the amount specified in the said letter; without giving an v such show cause notice and thereby depriving the petitioner to make any representation the Assistant Collector, Customs had determined Rs. 27,905.02 p. as the duty due from the petitioner. Therefore, the said determination of the duty by the letter Annexure 'B' was in violation of the provisions of Section 28 of the Customs Act and also in utter disregard of the principles of natural justice.

7. According to Sub-section (1) of Section 28 of the Customs Act, when any duty has not been levied or has been short levied or erroneously refunded, the proper officer within six months from the relevant date may serve notice on the person chargeable with duty requiring him to show cause why he should not pay the amount specified in the notice. Under proviso to Sub-section (1) of Section 28 of the Customs Act where any duty has not been levied or had been short levied or has been erroneously refunded by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter, the notice to show cause may be issued within 5 years instead of six months. In the instant case in his aforesaid letter (Annexure 'B') the Assistant Collector did not mention the reason why the duty had not been levied upon the consignment of kapok imported by the petitioner on 25th January, 1974. The Assistant Collector did not mention whether there was any collusion or wilful misstatement or suppression of facts by the petitioner in terms of proviso to Section 28(1) of the Customs Act. Samir Kumar Mitra, Assistant Collector of Customs in paragraph 7 of his affidavit-in-opposition however, inter alia alleged that the said consignment imported in January, 1974 was not assessed to customs duty due to misreading of the law and/or erroneous impression to that effect. Mr. Gopal Chakraborthy, learned Advocate for the petitioner, has submitted that even in their affidavit-in-opposition the respondents did not make any allegation that the duty was not levied by reason of any collusion or any wilful misstatement or suppression of facts by the petitioner. Therefore, according to Mr. Chakraborthy, the limitation for issue of a show cause notice under Section 28(1)(b) would be six months from the date on which the proper officer had made an order for clearance of the goods vide Section 28(3)(i)(a) of the Customs Act. I need not record any finding on the said question of limitation regarding issue of a show cause notice because the Assistant Collector in fact did not issue any notice requiring the petitioner to show cause why he should not pay the amounts specified in his letter Annexure 'B'. The Assistant Collector had straight-away determined the amount of duty due from the petitioner. On this ground the Rule ought to succeed.

8. I, accordingly, make this Rule absolute. Let a writ of Certiorari issue quashing the letter of demand dated 1st March, 1978 issued by the Assistant Collector of Customs, Calcutta Appraisement Unit (Annexure 'B' to the Writ petition). Let a writ of Mandamus issue commanding the respondents not to give effect to the said letter of demand dated 1st March, 1978 (Annexure 'B' to the writ petition). The Bank Guarantee if furnished by the petitioner be discharged.